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On Monday, August 22, the Alcohol and Tobacco Tax and Trade Bureau ("TTB") published a final rule expanding the Sta. Rita Hills viticultural area.[1] This long-awaited decision, which will take effect September 21, 2016, will add approximately 2,296 acres to the 33,380-acre region located in Santa Barbara County, California. The 2,296-acre expansion area contains three vineyards, two of which were already partially within the original boundaries of the Sta. Rita Hills viticultural area. Beginning September 21, wines produced by these vineyards will be authorized to bear the Sta. Rita Hills name on their labels.

Background

Established in 2001, the Sta. Rita Hills Viticultural Area ("AVA") is located between the towns of Lompoc and Buellton, with the Purisima Hills to the north and the Santa Rosa Hills to the South. The principal grape varieties produced in this region are Pinot Noir and Chardonnay. Distinguishing features are the Santa Rita Hills (obviously) and a cool, damp climate characterized by nighttime and morning fog and a marine-influenced airflow from west to east. The AVA has a longstanding reputation for producing high-quality Chardonnay and Pinot Noir, and many of its producers are highly regarded throughout the world.

In 2013, geographer Patrick L. Shabram, on behalf of John Sebastiano Vineyards and Pence Ranch Vineyards, filed a petition to expand the Sta. Rita Hills AVA to include a 2853.2-acre area just east of the current AVA. Shabram later modified the petition to reflect a smaller expansion area. On August 7, 2014, TTB published for comment a proposed rule that would expand the viticultural area as requested by Shabram. As I wrote in November 2014, this expansion was strenuously opposed by many stakeholders, including the Sta. Rita Hills Winegrowers Alliance (SRHWA), and the proposed rule elicited 121 comments from members of the public. The vast majority of the comments (91 comments from 88 individuals) were in opposition to the expansion. The primary points of contention were the name and climate of the proposed expansion area.

It should be noted that Shabram filed the petition for expansion without giving any notice to stakeholders within the current AVA. In fact, Shabram and the owners of John Sebastiano Vineyards and Pence Ranch Vineyards ignored an explicit suggestion from TTB to consult with the group that filed the petition to establish the AVA. Under these circumstances, the intense hostility to the proposed expansion is hardly surprising.

TTB’s Analysis

The TTB regulations define an American viticultural area as “a delimited grape-growing region having distinguishing features, as described in part 9 of the regulations, and a name and a delineated boundary, as established in Part 9 of the regulations.” [27 C.F.R. § 4.25(e)(1)(i).] These factors together give a legal life to the idea of terroir. When deciding whether to create or expand an AVA, TTB considers the following information, which must be provided by the petitioner:

Evidence regarding the name of the region

Evidence of the proposed boundary, including the basis for delimitation and identification of commonalities within the boundary

[7 C.F.R. § 9.12(c)(1).] As indicated above, the key areas of dispute in this case were the name evidence and the climate of the proposed expansion area. TTB considered the documentation submitted by Shabram as well as the public comments in making its final determination. The analysis is long and dense, so I will focus mainly on the name evidence, climate evidence, and concerns about reputational harm and future expansion. For the full analysis of the criteria, petition, and comments, visit the Federal Register.

Name Evidence

To demonstrate that the expansion area is known as Sta. Rita Hills, Shabram included a United States Geological Survey ("USGS") Board on Geographic Names decision card prepared in 1906 defining the eastern extent of the Santa Rita Hills in his petition. In addition, he submitted five comments in response to the opposition, in which he included anecdotal evidence and a recent newspaper article, a recent newspaper advertisement, and a recent brochure that that described Pence Ranch as being within the Sta. Rita Hills. Opponents of the petition argued that the proposed expansion area was not historically known as Sta. Rita Hills, but rather, as Buell Flat, Buell Flats, or Buellton Flats. They offered both anecdotal and documentary evidence to support these claims.

The TTB regulations make it clear that anecdotal information alone is not sufficient to prove name usage,[2] so TTB reviewed the documentary evidence included in the petition and Shabram’s comment, as well as the 1906 USGS decision card, a USGS bulletin on oil resources in Santa Barbara County from 1907, historical news articles from the Lompoc Record, and a report by an expert in land titles, the latter four relied on by opponents of the expansion. TTB also reviewed the regulatory history of the Sta. Rita Hills AVA.[3] It concluded that the evidence offered by Shabram was sufficient to show that the expansion area is in a region currently referred to by the name “Sta. Rita Hills.”

Furthermore, TTB concluded that the evidence offered by the opponents was insufficient to prove that the area is currently known as Buell Flat, Buell Flats, or Buellton Flats. In its lengthy and detailed analysis, TTB weighed specific pieces of evidence offered in opponents’ comments. For example, it noted: “With regard to the articles referencing ‘Buell Flat(s)’ which were included in comment 97, TTB notes that the articles all date to 1920 or earlier. Section 9.12(a)(1) requires evidence to show that the name is “‘currently and directly’ associated with the area of the AVA.”[4]

Climate

Shabram’s petition included data from seven weather stations to demonstrate that the expansion area has a climate consistent with that of the original AVA. Five of these stations are located in the current AVA, while one is in the expansion area and one is in nearby Ballard Canyon.[5] In addition, Shabram included an airflow map to show the pattern of the wind moving inland from the ocean. Shabram concluded, based on his analysis of the heat summation[6] data, that the climate of the expansion area “is more in-line with Santa Rita Hills,” and that it “is slightly cooler than at least one of the locations currently within the existing Sta. Rita Hills AVA.”

In all, TTB received 45 comments from individuals and groups who opposed the expansion based on climate. These comments alleged that the expansion area is significantly warmer than the existing AVA. With one of its comments, SRHWA submitted a comprehensive critique of the climate data offered by Shabram. This critique, authored by Dr. Deborah Elliott-Fisk, Professor Emeritus of Geography, Ecology, and Wildlife, Fish and Conservation Biology at the University of California, Davis, concluded that the climate data in the expansion petition were inaccurate and that Shabram’s data collection and analysis methods were flawed.

Elliott-Fisk also commissioned Mark Battany, the University of California Cooperative Extension Viticulture Farm Advisor for Santa Barbara and San Luis Obispo counties, to analyze data from weather stations located in vineyards throughout Santa Barbara County. Based on this analysis, Elliott-Fisk concluded that the proposed expansion area is “consistently warmer by 104 to 240 degree days °C” than the AVA, and that the transition line is the current eastern boundary of the AVA.

SRHWA also relied on a report from an environmental services company that concluded that the wind pattern data offered by Shabram were inaccurate and collected for too short of a time period. Furthermore, they took issue with the petitioner’s failure to provide information regarding “the model of the weather stations used to gather the data, how they were calibrated, or where they were placed with respect to ‘slope, aspect, orientation, land-cover, vegetation, and nearby structures.’”[7]

TTB was not convinced. It wrote:

TTB has determined that the expansion petition provides sufficient evidence to demonstrate that the climate of the proposed expansion area meets the climate parameters for the Sta. Rita Hills AVA as set forth in T.D. ATF-454 [the 2001 rule that established the AVA]: temperatures that are moderated by marine air and fog, are cool enough for growing cool-climate grape varietals (specifically, Pinot Noir and Chardonnay), and are warmer than temperatures in Lompoc and cooler than temperatures in the eastern portion of the Santa Ynez Valley AVA (specifically, the region near Lake Cachuma). TTB has also determined that none of the opposing comments provide sufficient evidence to show conclusively that the climate of the proposed expansion area does not meet these parameters. Finally, TTB believes that the petitioner has provided a sufficient explanation of the methods he used to collect and analyze the climate data for the proposed expansion area, and that TTB is able to determine that his methods are sound.

(Emphasis added.) With this language, TTB made it clear that the benchmark for climate evidence is the description found in the decision that established the AVA in the first place—in this case, T.D. ATF-454. With respect to the temperature analysis commissioned by Elliott-Fisk’s, TTB agreed that the data indicate “that the southeastern corner of the AVA is not always warmer than the rest of the AVA, as the expansion petition suggests.” It stopped short of invalidating the petition, though, because “the report used different weather stations and different GGD calculation methods from the expansion petition.”[8]

Furthermore, although the anecdotal evidence warning of Section 9.12 applies specifically to name evidence, TTB was not satisfied with the anecdotal evidence regarding climate, either.

Arguments Outside the Scope of the TTB Regulations

TTB also addressed comments that were beyond the scope of the criteria set forth in Section 9.12. Two of the concerns raised were damage to the reputation of the existing AVA and a “slippery slope” of further expansions of the Sta. Rita Hills AVA and other AVAs. TTB did not directly address the issue of reputational harm. Instead, it suggested that it is up to the producers within an AVA to cultivate its reputation by educating consumers. It noted, in language that some may consider terse and supremely frustrating, that “hypothetical financial gains or losses that may result from the establishment or expansion of an AVA are not considered by TTB in determining the merits of a petition.”

TTB did not offer much comfort with respect to the slippery slope argument, either. It pointed out that expansions are allowed under the regulations and that petitions are evaluated against the specific criteria of Section 9.12. Accordingly, it reasoned that this particular expansion will not open the floodgates to additional modifications. Furthermore, TTB reminded the public that “TTB's decision regarding whether to approve a proposed expansion is not based on the potential for further expansion or other modification of the boundaries of the affected AVA or any other established AVA.”

Takeaways

AVAs are legal creations that can change.

The expansion of the Sta. Rita Hills AVA is a reminder that a viticultural area is a legal construct that is subject to change. The TTB regulations provide detailed standards for the establishment, expansion, and curtailment of AVAs—a clear indication that these administrative creations are not immutable. While the topographic features of a region or the name by which it is commonly known may remain constant, the legal entity may change. With that said, there is always room to discuss the adequacy of the current criteria for creation and modification. Should it be more difficult to expand an AVA than it is to establish one? Should additional criteria be set forth? For example, should economic, reputational, and precedent-setting factors be taken into account? Given the variations in soil, climate, elevation, and other features within an AVA, how consistent must an expansion area be with the original AVA? Should the boundaries of existing AVAs be revisited periodically? How can stakeholders cope—and ultimately thrive—within the uncertainty of an AVA's boundaries? Should those who seek to modify an AVA's boundaries be required to consult with those created or benefit from it before filing a petition? Was this expansion of the Sta. Rita Hills AVA the right decision?

Another takeaway is that the establishment and expansion of AVAs are administrative processes that are driven primarily by documentary evidence. In fact, Section 9.12(a) provides: "A petition for the establishment of a new AVA must include all of the evidentiary materials and other information specified in this section. The petition must contain sufficient information, data, and evidence such that no independent verification or research is required by TTB." (Emphasis added.) The TTB regulations give documentary evidence greater weight than they give anecdotal evidence. As discussed above, anecdotal evidence is allowed, but by itself it is not enough to prove name usage, and TTB favors documentation with respect to other elements of Section 9.12 as well. Accordingly, commenters can strengthen their submissions by providing documentation that satisfies at least one specific part of the regulation. For example, statements such as “Everyone refers to this region as ‘X’” should be accompanied by recent news articles, advertisements, or video clips showing name usage. Commenters should familiarize themselves with the establishment and expansion criteria so that they can draft legally compelling comments.

Tips on comment writing could improve the decision-making process.

The federal public comment process is designed to be open and accessible. It is remarkably easy to submit a comment. This ease of submission is a little deceiving, though, given that not all comments have equal weight. TTB could help itself, industry stakeholders, and the general public by providing tips on comment drafting. It probably has not done so because government agencies cannot provide legal advice to the public, and tips might be construed as legal advice. Nonetheless, Regulations.gov has set an example by providing general suggestions for comments.[9] Rulemaking agencies and trade associations could assist by providing links to the relevant Part (with a capital ‘P’) of the Code of Federal Regulations. I don’t believe that the following language, preceded by a disclaimer, constitutes legal advice:

GOVERNMENT AGENCY considers factors including A, B, and C when deciding whether to do X. The most persuasive comments are those that address some or all of these factors and are supported by reports, news articles, images, videos, and other documentary evidence. Our regulations can be found at LINK. We encourage you to review them and all docket materials before drafting your comment.

Not everyone is a lawyer (thank goodness) or wants to consult one before writing a comment, but I believe that almost everyone can write persuasively if provided with clear, simple guidance and a link to the rules on which a decision will be based.

Comments are not votes.

The next point is obvious, but it’s worth highlighting: comments are not “votes.” TTB does not simply count the “ayes” and the “nays” and base its decision on the numbers. Such a quantity-over-quality approach would, in many cases, yield results that are contrary to Section 9.12. Trade associations often disseminate form letters that people can add their names to and submit. This practice does not guarantee a “win,” however. If the form letter is completely devoid of non-anecdotal evidence, it could be submitted by 50,000 people and still not bear the same weight as a single comment supported by a map, a news article, a photo, or some other documentary evidence. In addition, because TTB reviews every comment that it receives, a tidal wave[10] of submissions can significantly slow down the administrative process.

TTB decisions affect real people and businesses.

The impending expansion of the Sta. Rita Hills AVA is a shock to many in the California wine country, as well as to those outside California who were awaiting TTB’s decision. Many industry stakeholders based within the current AVA view it as an affront to their wines’ reputation, a bureaucratic failing on the part of TTB, a “money grab” on the part of the petitioning vineyards, and a threat to the future integrity of the AVA system. Their concerns raise important questions about the TTB decision-making process and remind us of the real human impact of government decisions. It remains to be seen what SRHWA and other stakeholders will do now. In any event, while the new Sta. Rita Hills AVA will surely be different, I believe that it will still be great.

[1] As a reminder, the TTB regulations (27 C.F.R. § 4.25(e)(1)(i)) define a viticultural area for American wine as “a delimited grape-growing region having distinguishing features, as described in part 9 of the regulations, and a name and a delineated boundary, as established in part 9 of the regulations.” These factors together embody the idea of terroir.

[2] Section 9.12(a)(1)(ii) of the TTB regulations (27 C.F.R. § 9.12(a)(1)(ii)) provides, “[a]ppropriate name evidence sources include, but are not limited to, historical and modern government or commercial maps, books, newspapers, magazines, tourist and other promotional materials, local business or school names, and road names.” The regulation also provides, “[a]lthough anecdotal information by itself is not sufficient, statements taken from local residents with knowledge of the name and its use may also be included to support other name evidence.”

[4] Section (a)(1) applies by virtue of Section (c), which provides: “If a petition seeks to change the boundary of an existing AVA, the petitioner must include with the petition all relevant evidence and other information specified for a new AVA petition in paragraphs (a) and (b) of this section.”

[5] “[D]ata from a weather station in Ballard Canyon was reviewed to contrast the Sta. Rita Hills AVA plus the proposed expansion area with warmer inland locations.”

[6] The heat summation system is a way of classifying the climates of grape-growing regions. There are different heat summation scales, including the UC Davis Heat Summation Scale and the Winkler Scale.

[7] Shabram responded with both anecdotal and non-anecdotal evidence, including information about his data collection techniques and a video of the Pence Ranch Ranch Vineyard shrouded in fog.

[8] TTB further noted:

TTB also notes that Mr. Battany clearly states in his analysis that his isotherm maps “are intended to be aids for the viewer to observe broad regional trends,” and that they “should not be used for assigning values to non-measured locations . . . .” TTB notes that the proposed expansion area is not identified on the isotherm maps, nor was a weather station from within the proposed expansion area used to develop the maps. However, based on the satellite photo included in the report to show the locations of his weather stations, TTB estimates that the proposed expansion area is almost due north of Station 26 and slightly east of Station 17, which places both stations within the current boundaries of the Sta. Rita Hills AVA. Based on this estimation, TTB believes that the isotherm maps show the proposed expansion area to be in the same isotherm as either Station 17 or Station 26 in some years, and to be in the same isotherm as both stations in other years. Station 23, in Buellton, is the closest station to the proposed expansion area and is consistently in a warmer isotherm than both the proposed expansion area and the AVA. Therefore, TTB does not believe that the isotherm maps conclusively demonstrate that the temperature of the proposed expansion area is either greater than the range of temperatures found in the AVA or is more similar to the temperatures of the region east of the AVA.

[9] Tip 11, however, encourages commenters to “[c]onsider including examples of how the proposed rule would impact you negatively or positively.” As we saw with the argument regarding reputational harm, TTB doesn’t necessarily care about such information.

[10] Note that while 121 comments is hardly a tidal wave when compared to the comments generated by other agency actions (a recent Department of Labor rule, for example, prompted nearly 300,000 comments), the recent expansion of the well-known Willamette Valley AVA generated only two comments.

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